10 min read

How to spot an investment scam

• Only 2 in 51 people think they’d know how to spot a fraudulent investment opportunity.

• Fraudsters are targeting the growing population of over 55 year olds, who typically have more money to invest.

• Last year alone, victims of investment fraud lost an average of £32,0002.

• We’ve put together some tips on what to look for so you can stay safe.

A concerned-looking woman on the telephone.

We all like to think we’re savvy enough to know how to recognise a scam. But fraudsters are savvy too, and they’re increasingly targeting victims using advanced tricks to win consumers’ trust.

To help combat against investment fraud in the over 55s, the Financial Conduct Authority (FCA) has launched the ScamSmart campaign. The campaign seeks to educate people on tactics used by fraudsters and provides tips on how to spot investment scams.

Because we’re here to enable families to work together to meet the financial demands of modern life, we want you to keep your money safe. Here are a number of tips offered by the FCA from their ScamSmart campaign which we hope will help you recognise the signs of a scam.

Knowing the signs

You should always be sceptical and cautious before investing your money. If any of the following happens to you, it very well could be fraudsters attempting to lure you into parting with your hard earned cash.- You unexpectedly receive contact about an investment opportunity. This could be a cold call or after receiving a promotional brochure that you weren’t anticipating. It could also be by email.

– The caller applies pressure by telling you the offer is only available for a short period of time. They might even offer you a bonus or a discount if you invest quickly.

– The investment risk is downplayed. This could involve the caller using legal jargon to suggest the investment is very safe or telling you that you’ll own actual assets that you can sell if you’re not happy with the investment’s performance.

– The returns you’re being offered are above the market rate and sound too good to be true. For example, you might be offered interest rates that are much better than those being offered by banks or building societies.

– The caller attempts to flatter you. They might praise you for being a knowledgeable investor or tell you that you’ve got a much better mind for investing than other people they’ve spoken to.

– You’re told the offer is only available to you and the caller may even ask you not to tell anyone else about the investment opportunity.

– They tell you that lots of people have already invested or are interested in the deal.

Unfortunately, with fraudster’s becoming increasingly confident and their tactics more and more sophisticated, the old adage ‘if it’s too good to be true, it probably is’ is often appropriate.

Always proceed with caution when considering investment opportunities. If in any doubt, you can also take the following steps:

1. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 1,004 GB adults aged 55+, in social grade ABC1, with a gross household income of £30,000+ and/or savings of £5,000. Fieldwork was undertaken between 27 January to February 2017. The survey was carried out online.
2. Figures from Action Fraud released in October 2016.

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.